Trade Desk stock signals a rebound in digital advertising

The Trade Desk Inc. NASDAQ:TTD is a leading, independent provider of programmatic advertising technology (AdTech) platforms. Its demand-side platform (DSP) allows companies to automate digital ad buying with better targeting and greater transparency. The information and technology company uses distributed artificial technology (AI) and sophisticated machine learning (ML) algorithms to perform data analytics to help buy the right advertising at the right price to reach the best target audience at the best time. Its clients include Walmart Inc. New York Stock Exchange: WMTCNBC, Roku TV, AOL and Spotify Technology SA NYSE: POINT.

The company competes with Alphabet Inc. NASDAQ:GOOGL owned by Google Ads and smaller independent programmatic advertising platforms operated by Magnite Inc. NASDAQ: MGNI AND Pubmatic Inc. NASDAQ: PUBM.

Kokai AI

The Trade Desk launched its AI-powered Kokai media buying platform in June 2023. It improves programmatic ad buying by providing an intuitive user experience (UX) with advanced measurement and collaborative innovation. Kokai deploys deep learning algorithms throughout the digital media buying sequence, accessing over 13 million ad impressions per second. Each impression can contain thousands of distinct signals. Kokai can assist programmatic marketers beyond campaign creation like its counterpart Koa, which launched in 2018.

Kokai deploys the power of Koa AI across the media buying sequence on the Trade Desk platform. Even in the absence of identifiers, KPI scoring and budget optimization, Kokai can perform predictive compensation to ensure marketers are bidding optimally by assigning a score to each ad impression based on its relevance to the advertiser.

Beating the lowest estimates

On February 15, 2024, The Trade Desk reported fourth-quarter 2023 EPS of 41 cents, matching consensus analyst estimates. Revenue increased 23.4% year over year to $605.8 million, beating consensus analyst estimates of $502.81.

It’s worth noting that The Trade Desk had lowered its Q4 2023 revenue forecast by as much as $580 million from consensus analyst estimates of $610.4 million in its Q3 2023 earnings report. This caused the stock to drop 16%. This time they easily missed the lowered estimates. The company also increased its stock buyback program to $700 million.

Driving on the rise

The Trade Desk increased first-quarter 2024 revenue by at least $478 million versus the $451.45 million consensus analyst estimate.

Jeff Green, CEO of Trade Desk, commented: “As we enter the busiest time of the year and look ahead to 2024, we have never been better positioned to capture a larger share of the $1 trillion advertising TAM. With the generational shift to CTV, growing opportunities in shopper marketing, our leadership in identity, and our biggest product launch ever with Kokai, we are better positioned than ever to help advertisers leverage data to drive growth and differentiate their brands.”

Analyst price target update

BTIG Research reiterated its buy rating and raised its price target to $98 from $91. Analyst Clark Lampen noted robust channel controls, and his December field work showed improved advertiser sentiment and higher brand spending in the fourth quarter. The agencies expect this to continue into the first quarter of 2024. Lampen sees more room for positive revisions. Amazon.com Inc. NASDAQ:AMZN Prime Ads and Google 3^rd The effects of suppressing third-party cookies are neutral to slightly positive for the Trade Desk business. Google’s deprecation of cookies will impact smaller-scale networks and publishers, potentially benefiting The Trade Desk.

Trade Desk Analyst Ratings and Price Targets I’m on MarketBeat. You can find the titles of Trade Desk competitors and competitors on the page MarketBeat Stock Screener.

Daily breakout of the descending channel

The daily candlestick chart on TTD illustrates a breakout of the descending price channel. The descending trend line started at $91.85 on July 31, 2023. The price channel continued to move lower, hitting a low of $60.23 in the Q3 2024 earnings report, where it lowered revenue estimates of Q4 2023. TTD recovered to the declining trend line at $77.92 on December 20, 2023, before rejecting and falling back to $61.48 on January 14, 2024.

Shares rallied through the upper trend line into Q4 2023 earnings and gapped higher upon release. The gap formed at $85.69 as shares rose to $94.00 before peaking. The daily relative strength index (RSI) rose to the 80 band before peaking and falling back towards the 60 band. Pullback support levels are at $80.02, $76.17, $69.72 and $64.77.

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